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Decentralized Purchasing, Its Advantages And Disadvantages

Concept And Meaning Of Decentralized Purchasing

Decentralized purchasing refers to purchasing materials by all departments and branches independently to fulfill their needs. Such a purchasing occurs when departments and branches purchase separately and individually. Under decentralized purchasing, there is no one purchasing manager who has the right to purchase materials for all departments and divisions. The defects of centralized purchasing can be overcome by decentralized purchasing system. Decentralized purchasing helps to purchase the materials immediately in case of an urgent situation.

Advantages Of Decentralized Purchasing

- Materials can be purchased by each department locally as and when required.

- Materials are purchased in right quantity of right quality for each department easily.

- No heavy investment is required initially.

- Purchase orders can be placed quickly.

- The replacement of defective materials takes little time.

Disadvantages Of Decentralized Purchasing

- Organization losses the benefit of a bulk purchase.

- Specialized knowledge may be lacking in purchasing staff.

- There is a chance of over and under-purchasing of materials.

- Fewer chances of effective control of materials.

- Lack of proper co-operation and co-ordination among various departments.